In this article we’ll explore how to sell an investment property. What are your options and which one makes the most sense?
Millions of Americans own rental properties and that number is increasing every day. Many people are seeing real estate investment as a great source of income that will protect them against economic downturns. Many became landlords out of necessity when the subprime mortgage industry collapsed in 2007. Real estate values dropped drastically and people that had to relocate were stuck with homes worth significantly less than they owed on them. Not able to sell their homes, they begrudgingly became landlords and rented their homes out. But regardless of how they came to be landlords, nearly all real estate investors will at some point be faced with having to sell off an investment property. Maybe the return on investment (ROI) just doesn’t justify holding on to the property and their equity would be better invested elsewhere. Maybe they’re retiring or need to liquidate the asset for another life event. Or maybe they’re tired of dealing with a problem tenant who doesn’t pay rent on time and is trashing the place. There comes a point in time where the property just needs to be sold.
What’s the Best Way to Sell an Investment Property?
The best course of action when selling an investment property will depend on your individual situation. If the house is in great shape, you’ve been blessed with great tenants who have taken care of your investment, and you’ve kept up with routine maintenance and repairs, you are probably looking to sell your house for the highest possible price to maximize your return. If this is the case and you’re willing to hold out for the highest possible offer, then you might be drawn to this first option…
1. Selling an Investment Property the Traditional Way
If the house has desirable upgrades, is in a desirable area, and needs little to no work to make it appeal to potential buyers, hiring a real estate agent to sell the house can be a safe bet. Hiring a Realtor does have its downside, though, and it does not guarantee the best possible outcome.
If you choose an excellent Realtor who knows the market well; can price your home accordingly; can attract potential buyers; and negotiate shrewdly on your behalf, you’ll probably walk away feeling good about the process. But keep in mind, not all real estate agents are up to the task in all of these areas. And even if they are, you can expect to pay three to six percent of the property’s final sales price in Realtor commissions. Those commissions are due whether or not the Realtor did a great job in getting you the highest possible sales price for the property. In addition to commissions, you’ll also be on the hook for closing costs.
There are also other factors to consider, such as time and convenience. Selling an investment property the traditional way can take more time than you might think—three months or more is a pretty standard timeframe to sell a property the traditional way. And during that time showings will have to be coordinated with any tenants currently living in the property. Tenants can be less than motivated to keep the property in tip-top showing condition throughout the process, which can be a turnoff to potential buyers. And if your tenants owe back rent, you’ll need to go through the eviction process before you sell the property.
Before choosing to sell an investment property the traditional way, you should also consider the second option…
2. Selling an Investment Property for Cash
While selling an investment property the traditional way might be the best move in some circumstances, many landlords find it more beneficial to sell their investment property for cash. Here are some factors to consider that might make selling your investment property for cash a smart move.
Time
Cash home buyers can close very quickly—typically in just days rather than months. Selling an investment property the traditional way takes time: from interviewing Realtors to having photos taken to multiple showings, negotiations, and waiting on final financing approval from the lender, the process can easily take months to complete. If time is a consideration and you just want to cash out equity and move on, selling to a cash home buyer is the way to go.
Expense
It costs nothing to get a cash offer on your investment property from a cash home buyer, so regardless of how you decide to sell your investment property, you owe it to yourself to get a free cash offer to consider.
And since cash home buyers buy houses “as-is” in any condition, you’ll can save yourself a nice chunk of change by avoiding expensive repairs and upgrades. Cash home buyers so vary, but cash home buyers like Myers Home Buyers charge no fees and will even pay your closing costs at settlement.
While you’ll typically get less for the house by selling to a cash home buyer, the savings you’ll get by avoiding steep Realtor commissions and expensive repairs can make for a better net gain. And since it can take months to sell your investment property the traditional way, you may end up paying unnecessary mortgage payments while the home sits on the market.
Convenience
Since the process of selling an investment property to a cash home buyer is fast and straightforward, it’s a much more convenient option. This is especially true if the property is occupied by tenants. Is it really reasonable to expect even the best tenants to disrupt their lives in order to keep the property looking immaculate for showings? The main reason many turn to the traditional process to sell an investment property is to get the highest possible sales price. But in order to achieve this goal, the property must be shown in its best possible light. If it doesn’t, you may be paying thousands in Realtor commissions, paying thousands more in repairs and upgrades, and sacrificing time and convenience chasing an offer that never materializes. Plus, in the event that you have a bad tenant who’s behind on their rent, A cash home buyer like Myers will still purchase the property.
Summary
When it comes to selling an investment property, you have options. Which option is best will depend on your individual circumstances. If the property is in great shape and you have time to hold out for your price, selling the traditional way through a Realtor could make a lot of sense. If the property needs work, you’re stuck with a problem tenant who is not paying rent or if you need to sell fast, selling to a cash home buyer makes a lot more sense. And with our extensive network of verified investors competing for properties, you can sell for cash and know that you’re getting the best possible price with Myers Home Buyers.
Myers Home Buyers offers free consultation to landlords considering selling an investment property for cash. A Myers representative would be happy to discuss your individual goals and provide a free, no obligation assessment of whether selling for cash would make sense, or if you’re better off selling the property the traditional way.
